Kenya encourages exports (as do most countries) by granting tax-free status to businesses involved in the export of goods and sometimes subsidize the exports. The Goldenberg scandal was based on the fact that exporters deposited US dollar earnings from the export in the Kenya central bank, and in turn received in exchange the equivalent in Kenyan shillings plus 20 percent. If one could export gold, the Kenyan government would be obliged to pass back a percentage of the hard currency generated by the export. Keep in mind that mining is a very small portion of Kenya's GDP with only one open gold mine (at Kakamega), so any gold export would first have to be imported or smuggled. In a nutshell, Goldenberg involved smuggling gold from Congo into Kenya, then legally exporting it and claiming 35% above the export price from the Kenya government. The Kenya Central Bank lost a substantial amount of money from cheque kiting. The project chief architect was a relative of Kamlesh Pattni. However, it was Kamlesh Pattni who in fact started a company named Goldenberg International to implement the scam resulting in PATTNI Kamlesh Manusuklal Damji being the centre of the scandal. The amount involved (600 million dollars) would not have occurred without Kenya government knowledge. It later emerged that the scandal involved almost all the politicians in the Moi government and a considerable percentage of the current Kibaki government. A notable politician to be implicated in the scam is former president Daniel arap Moi, and his sons and daughter who held senior positions in Kenya government. The judicial system was not much better and most Judges were happy to assist. Twenty three of Kenya's top judges resigned after evidence implicated them to the scam. Journalist also benefited by receiving money in return of being silent.

The scam started in 1991, almost immediately after Kenya government executed a economic reform intended to open up the Kenyan economy to globalization. The scam seems to have stopped in 1993 after it was exposed by a whistle blower, Mr David Munyakei , and have since been a daily part of Kenyan politics. There has been two investigations on the scam, one under the Moi government and the other under the current government. The gold was likely imported from Democratic Republic of the Congo, and therefore probably helped finance the war that still rages in that country.

External links

• BBC
• A short story on Goldenberg
• The scandal from Kamlesh Pattni view
• USA government study of Kenya's mineral industry(pdf)
• Document attempt by government to place blame on a Canadian
• Forensic accountants traces goldenburg transaction
• This article may explain Goldenburg in a different style
• CNN report on deportation of Canadian
• Involvement of judges in Goldenburg scandal